A federal judge in Texas yesterday refused a request by the Consumer Financial Protection Bureau to lift a preliminary injunction blocking the bureau’s credit card late fee rule from taking effect and move the lawsuit seeking to overturn the rule to Washington, D.C.
Earlier this year, the CFPB issued a final rule to lower safe harbor dollar amount for credit card late fees to $8 and make other changes, citing its authority under the Credit Card Accountability and Disclosure Act, or CARD Act. The American Bankers Association, U.S. Chamber of Commerce, the Fort Worth Chamber of Commerce and other parties filed a lawsuit in U.S. District Court for Northern Texas, arguing the bureau exceeded its statutory authority and used deficient analysis to achieve a pre-ordained outcome that will ultimately harm consumers.
Judge Mark Pittman in Texas ordered a preliminary injunction against enforcement of the rule after finding that the plaintiffs were likely to succeed on the merits of the lawsuit. He also initially granted a CFPB request to have the case transferred to district court in Washington. The U.S. Court of Appeals for the Fifth Circuit ruled in April that Pittman erred in transferring the case because his court have already granted a temporary injunction. After further legal wrangling, Pittman ruled yesterday that the case will stay in Texas, citing federal law stating that a venue for hearing a lawsuit against federal agencies is proper if no real property is involved in the disputed action.
“Neither side disputes that the Fort Worth Chamber resides in the Northern District of Texas or that there is no real property in dispute,” Pittman ruled.
Pittman also upheld the preliminary injunction, once again finding that “the final rule clearly violates the Card Act.”
